There may be turbulence ahead

PostedJune 29, 2012 2:01 pm

Organisations worldwide started fastening their seat-belts and jettisoning ballast in 2008, when the headwinds of an economic storm started to build. Chris Gabriel assesses where the scramble to avoid being blown off course has left us, and what needs to happen next.

The world started to change in September 2008 – it still hasn’t stopped changing, and for CEOs in Western economies it has been one hell of a ride. Who would have predicted in 2008 that we stood on the cusp of a global economic crisis that would have such dramatic consequences for our economic and social systems?

The economic tailwinds of consumer debt and the wonderful but unsustainable gust of CDO (Collateralised Debt Obligations) blew themselves out overnight – to be replaced with the headwinds of economic recession. As we know by now, shelter was hard to come by – business and government leaders in most Western economies felt its effects.

But how did they react?

Anyone keeping a close eye on the newspapers and television, or reading any of the business books on the crisis, will know that they changed what we will call the ‘front end’ of the business.

Not surprisingly, they looked for efficiencies, in particular seeking to make supply chains better, faster, cheaper. They looked hard at cost bases, slashing business costs like air travel (look what has happened to the business class airline market since 2008) and they looked for bigger cost base savings – cutting headcount or closing down manufacturing plants to reduce capacity.

Many stopped refreshing business infrastructure, capital expenditure becoming akin to a capital offence. In short, they looked at every single structure and process in their businesses and asked themselves if there was any fat or inefficiency that could be removed.

Given how quickly the storm developed and the likelihood of prolonged turbulence, CEOs addressed the areas of their businesses where they could quickly take out costs, and prepare themselves for economic stagnation.

They streamlined the front end, making their businesses better able to cut through the recessionary storm. They focussed (as they always have) on business outcomes. They wanted to create more Aerodynamic Businesses.

However, streamlining the front end is only one step toward a sleek, aerodynamic business model – especially if what sits behind is not re-engineered to ride the slipstream.

That is, CEOs and other business executives have cut all they can and the imperative has changed. Whether survival or revival is the target, the focus now is on positioning organisations to compete more effectively in an ultra competitive economy or prepare for growth, however modest it may be.

Given that all the fat has already been trimmed, the road to competitiveness and growth is paved with business innovation. And in an Aerodynamic Business everything and everyone has be focussed on business outcomes every single day.

In short, CEOs worldwide must seek to mould an aerodynamic shape for their entire organisations, not just the front end. There is no doubt in my mind that ICT will have a huge part to play in enabling the innovation that will drive growth and competitiveness within these lean businesses.

In that context CIOs will play a crucial role in ensuring investments in ICT are clearly linked to each organisation’s strategic vision for the future.

About Chris Gabriel

Chief Technology Officer, UK. Chris joined Logicalis UK in January 2006 to lead the business' focus on defining and marketing its core ‘go to market’ solutions propositions.

With 20 years of experience in the ICT industry, Chris has spent his career working within both systems integration organisations and IT vendors (Logicalis, 2e2, SCC, Cabletron Systems), and has worked for the last 15 years in senior product marketing and market roles in the UK, Europe and United States.

In 2008 Chris became UK Marketing and Solutions Director on the Logicalis UK executive team, and in March 2012 was promoted to VP of Solutions Management at Logicalis Group, where he was responsible for building a common international solutions and services strategy.

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